This excerpt taken from the BLK 10-K filed Mar 13, 2007.
Consolidated Fund Investments
Occasionally, the Company will acquire a controlling equity interest in a sponsored investment fund. All of the consolidated funds investments are carried at fair value, with corresponding changes in the securities fair values reflected in non-operating income in the Companys consolidated statements of income. In the absence of a publicly available market value, fair value for an investment is estimated in good faith by the Companys management based on such factors as the liquidity, financial condition and current and projected operating performance of the investment and, in the case of private investment fund investments, the net asset value as provided by the private investment funds investment manager which may or may not be BlackRock. When the Company can no longer control these funds due to reduced ownership percentage or other reasons, the funds are deconsolidated and accounted for under another accounting method, as appropriate. In addition, changes in fair value of certain illiquid investments held by these funds, including direct investments in equity or debt securities of privately held companies certain real estate products are recorded based upon the best information available at the time, considering any significant changes in the operations of the investment. At December 31, 2006, investments in consolidated funds represented $1,515,754 of the Companys total investments of $2,097,574.